November 18, 2008

Writing to George Bernard Shaw, during the composition period of the General Theory, Keynes justified his dismissal of Marx by claiming that the Theory “will largely revolutionize – not at once but in the course of the next ten years – the way the world thinks about economic problems. There will be a great change, and, in particular, the Ricardian foundations of Marxism will be knocked away.”

At the moment I’m reading Keynes’s Essays in Biography. His discussion of Ricardo and Malthus’s corresondence is interesting – Keynes writes: “If only Malthus, rather than Ricardo, had been the parent stem from which nineteenth-century economics proceeded, what a much richer and wiser place the world would have been today!” That sentence follows several long passages from Malthus’s side of the correspondence, which Keynes sees as articulating ideas neglected by the subsequent tradition. For example:

We see in almost every part of the world vast powers of production which are not put into action, and I explain this phenomenon by saying that from a want of the proper distribution of the actual produce adequate motives are not furnished to continued production… [I]f it be true that an attempt to accumulate very rapidly will occasion such a division between labour and profits as almost to destroy both the motive and the power of future accumulation… must it not be acknowledged that such an attempt to accumulate… may be really prejudicial to a country.

Now here’s part of one of Keynes’s earlier footnotes:

Marx, criticising Malthus, had held that over-population was purely the product of a capitalist society and could not occur under Socialism. Marx’s reasons for holding this view are by no means without interest, being in fact closely akin to Malthus’s own theory that ‘effective demand’ may fail in a capitalist society to keep pace with output.

Quite so. It’s a large mistake to see the foundations of Marxism as ‘Ricardian’, in this sense, or to think that a knocking away of such foundations is also the invalidation of Marx. (I haven’t read Ricardo, I should add, or the modern neo-Ricardians, and Keynes may well be being unfair about Ricardo too.) Marx’s discussion of crises, of overproduction, of the economic imperatives that move capital from industry to industry (driven not by the pull of ‘equilibrium’, but constantly refreshed disequilibriums) – all this is much closer to the Malthus of ‘effective demand’ than to the caricatured ‘long termism’ Keynes attacks, in the General Theory and elsewhere.

Although, of course: central to Marx’s critique is the way in which the logic of capital subjects our lives to the imperatives of production, valorisation, accumulation. Whereas Malthus is clear about the final purpose of his economic theorising:

I expressly say that it is my object to show what are the causes which call forth the powers of production; and if I recommend a certain proportion of unproductive consumption, it is obviously and expressly with the sole view of furnishing the necessary motive to the greatest continued production… [A]n increase of unproductive consumption among landlords and capitalists may… sometimes be the proper remedy for a state of things in which the motives to production fail.

October 20, 2008

I’m feeling a bit behind in economics stuff. So I thought I’d throw up a working definition of capitalism, open to wholesale revision if necessary, of course.

Say that capitalism has two main features.

1) Blind accumulation / consumption.

Capitalism is a system of economic and social organisation oriented toward production as an end in itself. Clearly the ‘profit motive’ is important here. But the ‘profit motive’ is only one of the more important of the various group or individual inclinations created by and sustaining a system oriented to production for its own sake. It’s a secondary question what is produced, and why – which is why Marx talks about people being subordinated to the processes of production, rather than the other way around. Another useful touchstone here is Keynes, in The Economic Consequences of the Peace.

The immense accumulations of fixed capital which, to the great benefit of mankind, were built up during the half century before the war, could never have come about in a society where wealth was divided equitably. The railways of the world, which that age built as a monument to posterity, were, not less than the pyramids of Egypt, the work of labour which was not free to consume in immediate enjoyment the full equivalent of its efforts.

Thus this remarkable system depended for its growth on a double bluff or deception. On the one hand the labouring classes accepted from ignorance or powerlessness, or were compelled, persuaded, or cajoled by custom, convention, authority, and the well-established order of society into accepting, a situation in which they could call their own very little of the cake that they and nature and the capitalists were co-operating to produce. And on the other hand the capitalist classes were allowed to call the best part of the cake theirs and were theoretically free to consume it, on the tacit underlying condition that they consumed very little of it in practice. The duty of ‘saving’ became nine-tenths of virtue and the growth of the cake the object of true religion. There grew round the non-consumption of the cake all those instincts of puritanism which in other ages has withdrawn itself from the world and has neglected the arts of production as well as those of enjoyment. And so the cake increased; but to what end was not clearly contemplated.

Another good touchstone here would be Weber on the Protestant Ethic, but it’s a while since I read it. And thinking of Weber, an important point of divergence from Keynes in this passage, I think, should be his analogy with religion. Depending on our understanding of religion, this may be fine – but it’s important to register, I think, that a general social inclination towards blind accumulation need not be produced by any individual or group faith in or orientation towards that end. We ourselves don’t need to believe in the virtues of blind accumulation in order for our actions to part of a social-economic system oriented towards it.

Another question here is what we mean by ‘production’. Capitalism counts certain behaviours as productive and others as non-productive. Indeed, there’s a two-fold division – between those activities that supposedly fall entirely outside the capitalist system of production (say, much of family life), and those in some sense non-productive activities that are universally acknowledged as central (e.g. finance). Not sure I’ve got anywhere to go with this just yet. But worth noting, I think, that lots of stuff that’s supposedly external to capitalism even in the former sense is no doubt important to the reproduction of the social forms that everyone acknowledges as capitalistic.

More should be said on all this, obviously, but moving on…

2) A system of production oriented around wage labour.

This is altogether shakier than #1, I think. Clearly slavery has played and continues to play a profoundly important role in capitalist accumulation. Nevertheless, the reason Marx gives labour such an important role in his economic & political writings isn’t just that he’s participating in and trying to foster a political movement of the working class; and isn’t just because labour as a transhistorical activity is essential to any production at all. Marx also sees wage labour as an essential feature of the capitalist system. (c.f. Diane Elson on The Value Theory of Labour.) My historical knowledge is more than a little shaky – but I think it’s probably fair to see capitalism proper emerging alongside the social upheavals that created a large-scale market in wage labour.

~~~

Probably worth noting, however, that we don’t necessarily need to find an essence of capitalism in order to, like, talk about or oppose it. It’s worth at least thinking about what such an essence might be, however, since lots of the central features of capitalism that we want to fucking abolish – e.g. massive exploitation – clearly aren’t specific to capitalism (even if capitalism’s specific forms of exploitation are). Also, contrariwise, because if we have an inaccurate sense of what’s essential to the capitalist system, we may direct our critiques and action against political or social forms that capitalism (and its regimes of exploitation) can operate perfectly well without.

Or it may be unhelpful even to think in these terms, I’m not sure.

[As will become customary, the ‘NP’ tag means that this stuff is… erm… in dialogue with Rough Theory. NP has a couple posts about Diane Elson’s essay here, for instance.]

April 4, 2008

“Banks and bankers are by nature blind…. A ‘sound’ banker, alas! is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows, so that no one can really blame him.”